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March 31, 2008 at 06:24:45
APRIL FOOLS: THE FOX TO GUARD THE BANKING HENHOUSE by Ellen Brown Page 1 of 1 page(s) |
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The Federal Reserve, which has been credited with creating the current housing bubble and bust just as it created the credit bubble of the Roaring Twenties and the bust of 1929, is now to be given vast new powers to oversee regulation of the banking industry and promote "financial market stability." At least, that is the gist of a Treasury Department proposal to be presented to Congress on Monday, March 30, 2008. Adrian Douglas wrote on LeMetropoleCafe.com, "I would like to think that this is some sort of sick April Fools joke, but, alas, they are serious! What happened to free markets?"1 In fact, what happened to regulating the banks? The Treasury’s plan is not for the private Federal Reserve to increase regulation of the banking system it heads. Au contraire, regulation will actually be decreased. According to The Wall Street Journal: "Many of the [Treasury’s] proposals, like those that would consolidate regulatory agencies, have nothing to do with the turmoil in financial markets. And some of the proposals could actually reduce regulation. According to a summary provided by the administration, the plan would consolidate an alphabet soup of banking and securities regulators into a powerful trio of overseers responsible for everything from banks and brokerage firms to hedge funds and private equity firms. . . . Parts of the plan could reduce the power of the Securities and Exchange Commission, which is charged with maintaining orderly stock and bond markets and protecting investors. . . . The blueprint also suggests several areas where the S.E.C. should take a lighter approach to its oversight. Among them are allowing stock exchanges greater leeway to regulate themselves and streamlining the approval of new products, even allowing automatic approval of securities products that are being traded in foreign markets."2 "Securities products" include the mortgage-backed securities, collateralized debt obligations, credit default swaps, and other forms of the great Ponzi scheme known as "derivatives" that have been largely responsible for bringing the banking system to the brink of collapse. But these suspect products are not to be more heavily scrutinized; rather, their approval will actually be "streamlined" and may be automatic if they are being traded in "foreign markets." The Journal observes that the Treasury’s proposal was initiated last year by Secretary Henry Paulson not to "regulate" the banks but "to make American financial markets more competitive against overseas markets by modernizing a creaky regulatory system. His goal was to streamline the different and sometimes clashing rules for commercial banks, savings and loans and nonbank mortgage lenders." "Streamlining" the rules evidently meant eliminating any that "clashed" with the Fed’s goal of allowing U.S. banks to be more "competitive" abroad. The Journal continues: 
"While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation. The plan would not rein in practices that have been linked to the housing and mortgage crisis, like packaging risky subprime mortgages into securities carrying the highest ratings. . . . And the plan does not recommend tighter rules over the vast and largely unregulated markets for risk sharing and hedging, like credit default swaps, which are supposed to insure lenders against loss but became a speculative instrument themselves and gave many institutions a false sense of security."
Regulating fraudulent, predatory and overly-speculative banking practices has been left to the States, not necessarily by law but by default. According to then-Governor Eliot Spitzer, writing in January of 2008, state regulators tried to regulate these shady practices but were hamstrung by federal authorities. In a February 14 Washington Post article titled "Predatory Lenders’ Partner in Crime: How the Bush Administration Stopped the States from Stepping in to Help Consumers," Spitzer complained:
"Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive ‘teaser’ rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.
"Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers. . . . [A]s New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices . . . .
"Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye. . . . The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). . . . In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation."
Less than a month after publishing this editorial, Spitzer was out of office, following a surprise exposé of his personal indiscretions by the Justice Department. Greg Palast observed that Spitzer was the single politician standing between a $200 billion windfall from the Federal Reserve guaranteeing the mortgage-backed junk bonds of the same banking predators that were responsible for the subprime debacle. While the Federal Reserve was trying to bail them out, Spitzer had been trying to regulate them, bringing suit on behalf of consumers.3 But Spitzer has now been silenced, and any other state attorneys general who might get similar ideas will be deterred by the federal oversight under which banking regulators are to be "consolidated."
The Federal Reserve under Alan Greenspan deliberately enabled and permitted the derivatives debacle to take down the dollar and America's credibility. Greenspan is now lauded, feted and awarded at the White House and on network television, and takes a victory lap tour promoting and signing his book and celebrating his multimillion dollar book deal, enjoying his knighthood status in England and hero status on Wall Street. And as the falling debris of the American economy still piles up around us, the very agency that enabled disaster is now seeking to consolidate ultimate authority and accountability to itself, and through centralization and arrogation of power, eliminate all those pesky little Constitutional and State regulations and agencies, recalcitrant governors and the last few whistle blowers, so that the further abuse of power can be streamlined through one agency only. That agency is to consist of an alliance of the banking powers and the executive branch, a perfect formula for the institutionalization of continual abuse.
Perhaps Spitzer was lucky that he was the target only of a character assassination. When Louisiana Senator Huey Long challenged the Federal Reserve and fought for the State’s right to oversee its own financial affairs in the 1930s, he was assassinated with bullets. Long’s local assertion of decentralized State powers, as provided for in the Tenth Amendment to the Constitution, enabled the State of Louisiana to loosen the grip of the corporations on the State's wealth and allowed the setting up of schools and public institutions that elevated the people of the State and placed its "common wealth" back into the hands of its citizens, while providing employment and education. The Constitution reserves to the States and the people all those powers not specifically delegated to the federal government, arguably including the creation of money itself, which is nowhere specifically mentioned in the Constitution beyond creating coins. (See E. Brown, "Another Way Around the Credit Crisis: Minnesota Bill Would Authorize State Banks to ‘Monetize’ Productivity," www.webofdebt.com/articles, March 23, 2008.) But in this latest attempt at expanding the Federal Reserve’s already over-expansive powers, we see clear evidence that the Wall Street and global banking powers have no intention of allowing their plans to be reined in by the Constitutional powers of the States and the people. Instead, they intend to fill up the moat and pull up the draw bridge on their feudal powers, and let the serfs shiver outside the gates for as long as they will put up with it.
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Ellen
I have for years argued that gold is nothing more than a belief system with no realistic underlying intrinsic value. A shiny trinket metal that has little commercial use and is instead horded. Gold has been responsible for some of the most wanton destruction in the world. Entire mountains torn down, massive fuel and energy consumed for what? A horded end product. Steams and ecosystems are laid to waste for all time as the dredges mine the creek beds for the yellow metal. Go figure. A hungry man would trade a pound of gold for a sack of potatoes. The monetary system of the Masai makes far more sense, the one with the most cattle is the richest...you can eat those things ya know? by Mike Folkerth (120 articles, 0 quicklinks, 2 diaries, 566 comments [1 recommended, 0 rejected]) on Monday, Mar 31, 2008 at 8:10:12 AM  (0+)
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Reply: Masai
Yes, I used to live in Kenya. The Masai lived in the hottest, poorest, driest of places. A young bright Masai was chosen for a scholarship to go to Oxford. He did it, but I read in an interview that he was eager to get back home to his people in the Ngong Hills. He just went out of duty. Value systems vary. That's an aside, but I agree; if we went on an all-gold system, where would we get the gold? The government would have to buy it and swap all the Federal Reserve Notes and checkbook money for it, and what would the government use to pay for the gold? The notes and checkbook money would be worthless. "Money" is just an accounting tool for keeping track of who owes who what; it can originate as an accounting entry and can be extinguished when the credit is used. If you want a "fixed" money supply, just pass a law that the government can issue only so many credits and no more. It can still all be done with accounting entries. by Ellen Brown (40 articles, 0 quicklinks, 3 diaries, 93 comments [11 recommended, 0 rejected]) on Monday, Mar 31, 2008 at 11:54:16 AM (0+)
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Write your Congressman and Senators today!
Please contact your two US Senators and your Congressman TODAY and tell them that you oppose the EXPANSION of Federal Reserve’s power. This is one of the most important phone calls and letters you can FAX to your Senator and Congressman. I have included a sample letter and talking points as well as your Senator and Congressman’s contact information below: Dear (Senator or Congressman) I am extremely concerned about President Bush’s plan to give the Federal Reserve more power. Why do I oppose it? Here is why I oppose it: BECAUSE, the Federal Reserve is no more federal than Federal Express. And Like Federal Express, you will not find it in the Government pages, you will find it in the business section. Because, the Federal Reserve is a PRIVATELY OWNED Central Bank. Because, one of the PRIVATE SHAREHOLDERS of the FED is J.P. MORGAN BANK! And I invite you to recall that JP Morgan recently scooped up BEAR STEARNS for pennies on the dollar, consolidating billions of dollars, while the shareholders got SCREWED, and We The People, the tax payers, get to pay for it! Because it had a big hand in creating the boom and bust cycles since 1913. Because it holds much of the blame for our problems that we are experiencing in our economy. Because to give extreme power to a corporation to fun a people is the very definition of FASCISM! Instead of giving it MORE power, we should give it LESS power. ( I can Guarantee you that both TX Senators and Rep Culberson have copies of “The Money Masters” and “Money as Debt” because I gave mailed a set to their Washington offices, and hand delivered them to their Houston office. ) Ask them if they watched the “The Money Masters” and “Money as Debt” If they indicate they have not, ask them “WHY NOT?” and encourage them to pay attention to it. We Need Monetary and Regulatory Policy Reform http://www.visi.com/juan/congress/ https://forms.house.gov/wyr/welcome.shtml Cornyn- http://cornyn.senate.gov/public/index.cfm?FuseAction=Contact.OfficeLocations Hutchison- http://hutchison.senate.gov/contact.html Cuberson- http://www.culberson.house.gov/contactinfo.aspx Poe- http://poe.house.gov/Contact/ Lee- (numbers at bottom of page) http://www.jacksonlee.house.gov/ Gene Green- http://www.house.gov/green/contact/ Al Green- http://www.house.gov/algreen/contact.shtml Lampson http://lampson.house.gov/?sectionid=8§iontree=8 Paul- http://www.house.gov/paul/services.shtml (call for moral support) I may have left one or more congress persons out…. http://www.visi.com/juan/congress/ https://forms.house.gov/wyr/welcome.shtml Talking points: 1)Today, the federal government burdens us with one of the most dangerous taxes it can impose — the inflation tax. When the federal government finds that it cannot afford its out-of-control spending, and is unwilling to directly tax the public, it resorts simply to creating the money out of thin air. Inflating the money supply is the easiest form of financing the government. The Federal Reserve, an unelected and unaccountable private organization, pumps more dollars into the economy whenever it chooses. Because the public is forced to accept these bills, the Fed essentially gets away with legally counterfeiting. We cannot possibly expect the government to control spending when it has a blank checkbook. This greatly benefits the politicians and special interests — they are able to finance the massive welfare-warfare state. But how does this inflation affect you? Basic economics tells us that the more there is of a good, the less valuable it becomes. This is also true of money. The dollar is worth four cents of what it was when the Federal Reserve was created in 1913. Day by day, every dollar you have is being devalued. You pay an inflation tax without even realizing it because you are forced by a falling dollar to pay more for goods and services. The disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation, are some of the greatest threats facing our nation today. It is this one-two punch — Congress spending more than it can tax or borrow, and the Treasury printing money to make up the difference — that threatens to impoverish us by further destroying the value of our dollars. By legalizing competing currencies, we can end the Federal Reserve’s stranglehold on our money supply and begin to restore value to the dollar. But Congress will continue to spend extravagantly until we the people make our views known at the ballot box. by SwampFox (0 articles, 0 quicklinks, 0 diaries, 3 comments) on Monday, Mar 31, 2008 at 2:34:54 PM (0+)
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Reply: Get rid of the Fed, or at least bring back the M3
Good letter, SwamiFox, and mentions good solutions (you might want to double-check for typos, though). The whole Fed system is the direct result of greedy people like the (OpEd censored my use of a word rhyming with lion, begins with z, and ends with a t) Rothschilds & Rockefellers, who want to control the world through monetary policy. After devious manipulations going back more than a century they finally rammed through the Federal Reserve system, a bane to the money policy of the American people. Andrew Jackson stopped them in the first half of the nineteenth century, but cockroaches always have a habit of coming back for more thievery. Since 2005 they've even refused to publish the M3 money supply statistic so we could see how much money they are 'creating'. How are we to understand if their devaluing of the dollar is an artificial creation due to putting too many notes in circulation? Any tranparency should also begin with scrutiny of the FED, and re-publishing this vital statistic so we can see what is really going on. by Paul Magill Smith (0 articles, 0 quicklinks, 0 diaries, 135 comments [46 recommended, 0 rejected]) on Monday, Mar 31, 2008 at 8:41:38 PM (0+)
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Nordic-style nationalization of banks
This may be the solution...if our Congress has the guts.. Click here: Fed eyes Nordic-style nationalisation of US banks - Telegraph It would involve (Gasp!) the stockholders NOT making money on our misfortunes, and (Gasp gasp!) a total strip-down of the banking CEO's! by Bia Winter (1 articles, 2 quicklinks, 1 diaries, 169 comments) on Tuesday, Apr 1, 2008 at 5:30:24 AM (0+)
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Nationalisation
A British bank also got into serious financial trouble through just plain stupid decisions but the Government bailed them out by nationalising the bank. The procedure is to nationalise a failed private enterprise, stabalise it with tax payers money then sell it back to the shareholders. Thatcher sold off all of the nationalised industries which were all doing very well, not making a profit but providing a valuable service. The railways were running services to remote corners of Britain at a loss financialy at face value but not in terms of keeping polution down and stopping the migration to the cities. In Germany in the 30s money was printed at an alarming rate causing runaway inflation. There was a story of a German on finding a basket full of money simply tipped the paper out and took home the basket, money became worthless. In the USA the same thing is happening and there are history lessons to be learned from Germany's experience, they caused havoc throughout most of the world, the USA will do the same. The havoc the USA is causing now will be nothing compared to what is to come. Vote Nader in massive numbers and we may have a chance of diverting the inevitable disaster. by douglas kay (0 articles, 0 quicklinks, 0 diaries, 83 comments) on Tuesday, Apr 1, 2008 at 8:04:11 AM (0+)
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Borrower beware.
What is needed to protect the average Joe from lender fraud is a standard application form which each potential borrower can read and understand. Written in simple language with known clauses, no small print, no hidden charges. The USA is a nation of crooks, it has to be to survive in a dog eat dog society, nobody can relax or let their guard down for a minute, if you do it could cost you everything you own. by douglas kay (0 articles, 0 quicklinks, 0 diaries, 83 comments) on Tuesday, Apr 1, 2008 at 8:16:08 AM (0+)
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Douglas
My wife spent 18 years as a lender and spent countless hours explaining to people what the loan entailed...only to be asked, "What's the monthly payment starting out." Bankers used to just say NO when they saw a person getting in trouble, today they help people get in trouble, as they can sell the loan to someone who sells the loan. My wife quit years ago due these new practices, but the game is nearly up and the U.S. is entering a recession of enduring quality. by Mike Folkerth (120 articles, 0 quicklinks, 2 diaries, 566 comments [1 recommended, 0 rejected]) on Tuesday, Apr 1, 2008 at 8:53:13 AM (0+)
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Personal Responsibility
It is the banker's fault! It is the Fed's fault! It is George Bush's fault! Etc Etc. It is always someone's fault besides the people at the bottom of the ladder who are ignorantly taking out loans they can't pay back, using credit up to their limits, etc. People are, lets face it, greedy. The lenders and the borrowers. Lenders want to fleece the borrowers and borrowers want more and more without good colateral to pay for cheap toys they do not need and are willing to mortgage their futures to get it. When things go bad, as they always do, they both want us, the taxpayer, to bail them out of their greed and stupidity. If I buy a house with a mortgage that I can't afford in the best of times with the expectation that housing prices, like the stock prices during the Clinton Bubble in the 1990s, will go on up forever then I am GAMBLING. Gambling with my future. If you gamble there are always two sides of the coin - winning and losing. If I win, great, if I lose I shouldn't be able come to you asking you to bail me out of my self-made financial problems. If borrowers had been prudent and responsible then we wouldn't be in this mess. Lenders share the blame for sure but certainly do not deserve all of it. People were gambling and they lost. Housing booms and stock booms do not last forever and there were clear signs that the party was over. This is another example that the educational system in the US is in the toilet. It will happen again. And again. by Mad Jayhawk (3 articles, 0 quicklinks, 2 diaries, 652 comments [56 recommended, 3 rejected]) on Tuesday, Apr 1, 2008 at 12:47:37 PM (0+)
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Foreign investors veto Fed rescue
March 17, 2008, The Telegraph (One of the U.K.'s leading newspapers) As feared, foreign bond holders have begun to exercise a collective vote of no confidence in the devaluation policies of the US government. The Federal Reserve faces a potential veto of its rescue measures. Asian, Mid East and European investors stood aside at last week's auction of 10-year US Treasury notes. "It was a disaster," said Ray Attrill from 4castweb. "We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed." The share of foreign buyers ("indirect bidders") plummeted to 5.8pc, from an average 25pc over the last eight weeks. On the Richter Scale of unfolding dramas, this matches the death of Bear Stearns. Rightly or wrongly, a view has taken hold that Washington is cynically debasing the coinage, hoping to export its day of reckoning through beggar-thy-neighbour policies. But even if you think the Fed has no choice other than to take dramatic action, the critics are also right in warning that this comes at a serious cost and it may backfire. The imminent risk is that global flight from US Treasury and agency debt drives up long-term rates, the key funding instrument for mortgages and corporations. The effect could outweigh Fed easing. Overall credit conditions could tighten into a slump (like 1930). It's the stuff of bad dreams. As the Wall Street Journal wrote this weekend, the entire country is facing a "margin call". The US has come to depend on $800bn inflows of cheap foreign capital each year to cover shopping bills. As of June 2007, foreigners owned $6,007bn of long-term US debt. [Most] likely, the twin crash in the dollar and US agency debt reflects a broad exodus by global wealth managers, afraid that America is spinning out of control. Note: Why is the U.S. media not reporting important information like this? And why was the fact that gold broke $1,000 for the first time ever in mid-March reported widely in the media? much thanks to Fred Burks and the team at www.WantToKnow.info. by Rady Ananda (182 articles, 374 quicklinks, 49 diaries, 1718 comments [201 recommended, 2 rejected]) on Thursday, Apr 3, 2008 at 5:22:01 PM (0+)
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